Kickstarter: Lessons Learned, Stats, and Hidden Costs


Lessons Learned

Before I launched my Kickstarter Project last week I did quite a bit of research — because as we’ve established by now, I am a numbers freak!! In this video we’ll answer some common questions about crowd funding, including:

  • IndieGOGO or Kickstarter?
  • What are my chances?
  • How long is too long?
  • How much of of the contributions will I ACTUALLY get?
  • There’s still lots to learn about crowd funding and whether it’s right for your project, but hopefully this video will get you started out right!

    What projects are you considering crowd-funding for?

    Have you run a Kickstarter or IndieGOGO campaign? What lessons did you learn that I missed?

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    Posted in Featured News, Helpful Hints.

    17 Comments

    1. Nice breakdown, Robin, and good luck with your first campaign!

      I just posted an article today on five things I learned running my first campaign – http://www.comixtribe.com/2012/10/08/5-things-i-learned-running-a-successful-kickstarter/

      Also, one area of possible correction…

      The taxes issue.

      As far as I know, yes, Kickstarter is taxable business income. But all of the expenses associated with fulfilling a KS project are business expenses, and thus tax write offs. So, if you raise $10K, and it costs $10K to deliver your rewards, I believe you’re tax liability is zero.

      Again, I’m not an accountant, and it’s probably worth reaching out to a tax professional at some point to make sure you get this right.

      • You’re right Tyler. As long as you have expenses (printing, promotions, etc.) to balance off the income, the net to your taxable income should be zero, or near to it. The point of Kickstarter is not to make you profit FROM the campaign itself, but from the sales of the creative project you’ve produced (book, CD, prints, etc.).

        Now if you sell 1,000 books at a profit, then you have income, but it will not be from the Kickstarter.

        All said though, one has to consider what the ultimate outcome will be. I’ve been self-employed for nearly 3 decades and it’s all about how the pluses AND minuses add up that counts.

      • I see your point, but I’ve been warned one too many times to assume it’s safe to ignore taxes. That, and many of the independent comic creators I follow made a point to include taxes in their campaigns. Since some of them are doing their second or third Kickstarter, I took it as a good thing to think about:

        EXAMPLE 1: Kory Bing of Skin Deep, for her second KS campaign.
        GOAL: 16,500. 6,000 for books, 4,000 for shipping, 1,650 for fees. Leaving 4,850 for taxes (30%).

        EXAMPLE 2: Dylan Meconis who breaks down the numbers and states: “Approximately 33% of the funding goal (just over $5000) goes to pay the state and federal taxes that will be levied against the money raised. American tax law doesn’t count up-front production costs as an immediately deductible business expense, so at first I’ll have to pay taxes on nearly all of it as if it were pure income. (As a freelancer, I file quarterly; that means taxes will be due just two months after the project is funded, before I even receive the printed books.)”

        When it comes to researching the subject, the Jury is out. Technically, these are pre-sale items, but everything seems to get a little fuzzy depending on WHEN you spend the money and how you interpret a campaign.

        Let me put it this way: Julia is depending 100% on KS funds to print her book. She asks for, and receives, $6,000. Then the year ends. She must pay 20-30% of that to the government. In January of the next year, she goes to the printer, but now she only has 70% of the funds she thought she would. Too bad Julia! Sure, when tax season rolls around next year, if she spent that $6,000 it will be a loss, but in the meantime she’s going to have to find another grand or two to cover the difference. So perhaps Julia should make sure she has a back up plan before she starts up her campaign!

        I’ll be sitting down with my accountant fairly soon, so if I need to issue an update after that time, I’ll definitely do so!

    2. This was pretty helpful, especially the parts about the rewards and the hidden costs. I’ve been keeping an eye on Kickstarter for when I want to get my own projects up and running. It’s really good to know some information about where to place my reward levels AND how much I can expect to net from the campaign.

      • I’m glad it was helpful! While it’s great to have a solid foundation to start your campaign from, I’ve also found that being able to adapt as a campaign goes on is very important too!

        There’s lots of great resources out there for KS hopefuls. In fact, there’s an entire series of podcasts and webinars dedicated to the subject here: Funding the Dream!

        Best of luck with your projects when you decide to take the plunge on funding!

    3. Good video. I would also add that on Indiegogo, you have a choice between flexible funding, which you described, and a fixed funding goal which is more like Kickstarter. Also re: taxes, I know I have seen creators talking about the problem of receiving the money in one fiscal year and using it to pay for the needed items (printing, payments to artists and writers, etc) the next year. It sounds like one needs to make sure they spend the money they got through crowdfunding in the same year they received the money, or there might be tax ramifications. I’m not an expert on this, but I thought it sounded like something else to consider.

      • That’s a good point — I didn’t know that IndieGOGO had added a more flexible plan! That’s great information, thank you!!

        Your take on taxes has been the general consensus I’ve seen as well. If possible, spend what you get ASAP, so it’s included in the same fiscal year.

    4. We just finished a kickstarter campaign ourselves .One of the truest most valuable thing we came out of that was UPDATES.Always put up an update…..anytime you have anything.It is truly important that you get your investors involved and happy that they out in for your project.I have seen soooo many kickstarter fail because of the lack this!!!

      • Very good to know! What types of updates did people respond to the most? What would you recommend people keep in mind when sharing an update? How much is too much, or is there no such thing?

    5. Very informative video! Sorry to be a nitpicker, but I lost a lot of the valuable info you were saying in the middle because of the hyper music. It’s a tad hard to absorb the facts when it sounds like the soundtrack from a Mega Man game is zipping along!

      • It’s good to have a clear idea of where you are in your webcomic journey! It sounds like you have a solid perspective on what you need to do next: Content, content, content!

        Still, it never hurts to think ahead a few weeks, a few months, a few years! I know that when I started thinking about a book for my first project (back in 2002!) it wasn’t until I was hundreds of pages in…and I realized that all of them would need to be re-scanned and reformatted! Ouch! It was a lot of work, and I never did get through it all.

        That doesn’t mean that a printed book is the ONLY path — there are LOTS of things you can do with a webcomic. It’s worth thinking now about what that might be! Even if it’s just to have fun with “What if…” scenarios!

    6. Hello, thank you very much for the informative video, I´m thinking in crowdfund a small project, sometime next year.

      But… This tax issues scare me to death, could you help me figure out one thing?
      Here goes, I´m from Portugal, and I´m thinking of using either Kickstarter or indiegogo, because they are both international and with a lot of funders, also my project it´s for the whole world and not just for portugal.

      But, the tax part confuses me, how does the US, Canada, Europe, whatever besides portugal, affects me? Do I have to pay taxes in those countries too if I´m funded by a US or european citizen?
      I would really appreciatte some information on this part, since I don´t want to get surprises as I go…

      Also, I see above the comments about asking for the funding and spending it 100%, so is it bad if I get profit right from the get go with my project? Because my business plan was a bit different. The idea was with the first project after rewards and project made, I get a small amount of profit, that small amount would be used for the next project prototype, plus daily life expenses udring the period to build the prototype, after that I would do another crowdfunding campaign.
      Whatever my first project would sell would be an extra, to avoid surprises.
      Is it wrong to do so? Because I don´t see how people can live without making some profit from their crowdfunding. :X After all, when you ask for money to build something or create a business, you will always need an amount for YOU and the ones you emply to live right? I don´t see how you can spend two, three or 6 months building a business and only have enough money to build the business, nothing else.

      Thanks in advance!

      • Hi Manuel! I’ll do my best to answer your questions!

        Taxes are country-based, and are not applied until after funds are received. So you will get (Full amount – KS fees – Credit Card Processor Fees). In the USA, since Kickstarter contributions are for specific products, it is treated as taxable income come tax season. However, if Portugal does not have income tax, this will not apply. Consult a local accountant!!! I cannot emphasize that enough, regardless of where you are.

        On a side note – KS only recently added England & Canada based projects. They are not nearly as international as IndieGOGO.

        Since, as I said earlier, crowd-funding is technically getting advanced funds for a product, it is not unreasonable to set your contribution amounts at a rate that gives you a profit. Otherwise you’d be unlikely to raise enough to fund your product. It is encouraged to give your backers a good deal. It is also up to you to define your costs. Are you including your time? Materials? Services? Keep in mind that you don’t want to over-do it. Most sucessfull projects are for $10,000 or less. Crowd-funding is a form of seeking investment, NOT sales. It should not be the only place where your product reaches your consumers.

        • Thank you very much for the answer Robino! 🙂

          About taxes, yeah, of course I´ll have to pay here at Portugal, because it´s income, but after discounting all the materials and etc, if I don´t go over a certain amount I think i´m free of some higher tax rates, but that I´ll check with my accountant, no problem.

          What i was affraid is if I had to do paper work also in other countries, since I don´t know how kickstarter/crowdfunding works on that matter.

          About kickstarter vs indiegogo… I get that feeling that Indiegogo it´s better for me because it´s already international, but kickstarter has much more people, so it seems faster to raise the amount of money I might need.

          About investment or sales, I was thinking in using kickstarter for sales, like a direct sale, where people pay for the material and so I don´t need to go for funding with banks and etc, that always charge percentages and etcs… I know it´s a long shot, but I don´t see the product I want to do raise enough money to be made on a factory and make big amounts to sell all over the world, it will be pretty much done at my little backyard shop in a limited kickstarter edition, and of course, gifts and a good deal, that is a must.
          It´s also to raise money to do better pieces (the first parts are always harder and expensive…), and to get some new machines to help build them faster.

          But my idea was the one I described above, first kickstarter project is one project, raise money to build it, new machines, new parts and raise a small amount to build the next prototype, because I like to show a working prototype on my project, making just some images, drawings or 3D… people might not believe it, one this first project it´s ok, since it´s a simple, not-so-expensive project, so i can do the prototype myself, but the next ones will be complex and some pieces must be made in some factory, and I don´t see me having money to build them in order to show a working prototype in the second KS project… :/ That´s why I asked if it´s ok to do it or if someone already tried to do it. :/

          Thanks again for the answer, very helpfull!! 🙂

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